Increase in Wisconsin Dairy Farmers Filing for Bankruptcy

Wisconsin dairy farmers have been in an increasingly tense financial crisis. With milk prices being in decline over the past decades, dairy farmers in the state have been forced to make the difficult decision to file for Chapter 12 bankruptcy. Chapter 12 bankruptcy is reserved for farmers and fisherman. According to a new report published by the Wisconsin Policy Forum, the number of Wisconsin farms that have filed for bankruptcy has more than doubled since 2014, the year milk prices began to fall. In 2014, there were 22 Chapter 12 bankruptcy cases in Wisconsin. In 2017, the state saw 50 filed.

These numbers are distressing for many reasons, one of which is the detrimental effects that may impact the entire State of Wisconsin. A failing dairy industry means widespread job loss. Dairy farmers would not only find themselves out of work, but then there are the farmers who depend on them to purchase grain. There are also people employed by dairy processing plants that would suffer job losses.

Why has there been in Increase in Dairy Farmer Bankruptcy Rates?

The milk price increase seems to be the trigger point for the increase in filing for Bankruptcy among dairy farmers. There is a decrease in demand for dairy products. The reason for this could be due to the number of alternatives to cow’s milk on the market or an increase in dairy allergies and intolerances. Whatever the reason, the demand for dairy is not at the level it used to be. Demands for products increase and decrease over time, but dairy farmers feel the effects of this more poignantly than other commodity producers. Dairy farmers cannot store and save their product, like grain producers, until prices increase. They need to move the product immediately or it expires.

The Wisconsin Policy Forum Report believes that a major contributing factor to the increase in bankruptcies filed is the decrease in producers’ income. According to the report, the net farm income in Wisconsin plummeted 56 percent between 2011 and 2017. With milk prices low and income levels falling, the farmers would likely be forced to take on more debt and seek bankruptcy. Unfortunately, it does not look like things will be getting better in the near future. The U.S. Department of Agriculture’s 2019 Farm Income Forecast predicts farm debt increasing by 4 percent this year. This means farm debt would be at its highest level since 1982, reaching $426.7 billion.

What is Being Done to Address this Problem?

In the midst of this dairy farm financial crisis, the State and its dairy farmers are looking for ways to help alleviate the problem. The fact that 700 dairy farmers left the business in 2018 is cause for concern. This is the time for some innovative solutions. Farmers are looking into different ways of cutting costs. This includes improvement in management of each cow’s stall. Better management means cleaner stalls. Cleaner stalls mean less bacteria and this means a decrease in the risk of infection which can be costly to treat. Additionally, better stall management means less use of expensive cow sanitizer used in the milking process.

Former Wisconsin Scott Walker also created the Dairy Task Force 2.0 comprised of farmers, processors, and other leaders of the industry. The Task Force is in place to brainstorm ways to help save the dairy industry. More recently the Task Force proposed increasing farmer access to capital although this proposal is a bit controversial. Some believe allowing farmers to borrow more money during times of financial stress could inevitably lead to even higher bankruptcy rates.

Trusted Bankruptcy Attorneys Serving Milwaukee

The State of Wisconsin, a state known for its cheese and dairy products, is proud of its dairy farmer heritage. It is difficult to see the financial issues that face dairy farmers these days. Bankruptcy is a difficult choice to make and comes with seemingly endless legal issues. The experienced bankruptcy attorneys at Hanson & Payne, LLC are here to answer your questions and help you through the entire bankruptcy process. Contact us today.